Lenders to insolvent SBQ Steels prefer to take the liquidation route

Express reservation over Liberty's capability to take process ahead

Lenders to insolvent SBQ Steels have preferred to take the liquidation route for the entity, expressing reservations over UK-based Liberty House’s capability to take the process ahead, sources close to the development said.
 
The resolution professional (RP) has filed an application under Section-33 of the Code of Liquidation, before the Chennai Bench of the National Company Law Tribunal (NCLT), the insolvent entity said in a notification to stakeholders. “The Corporate Insolvency Resolution Process of SBQ Steels ended on November 13,” it said.
 
Edelweiss Asset Reconstruction, the lead lender, has loan exposure of Rs 29.97 billion. The total debt of SBQ Steels stands at Rs 36.40 billion. Union Bank of India and Bank of Baroda are among other lenders.
 
Sanjeev Gupta-led Liberty was the sole bidder for SBQ Steels. The insolvent company has 500,000 tonne capacity in Nellore district of Andhra. Promoted by RKKR group, SBQ Steels manufactures pig iron, sponge iron, billets, bars and wire rods among others to cater to automobile and engineering sectors.
 
“As far as we know, discussions are still on and lenders have not intimated us about this development,” a Liberty source told Business Standard.
 

Though Liberty has been an active participant and has managed to bag Amtek Auto and Adhunik Metalliks among the NCLT-listed entities, lenders overall have been wary of the new entrant.
 
Earlier this month, the NCLT had ordered withdrawal of Liberty’s resolution plan for Amtek Auto, calling its approach “casual” after the latter failed to pay a performance bank guarantee.
 
Liberty had won the auto component company in July and was expected to pay lenders Rs 48.10 billion by October.
 
Liberty has made these acquisitions via its parent GFG Alliance and is also setting up an office in Mumbai after having appointed Mahendra Singh Mehta as its India head.